Gin makers lobby hard to avoid US tariffs

SPIRIT manufacturers are lobbying intensively to prevent gin exports to the US being punitively taxed by the Americans as part of a trade dispute with the European Community.

Gin makes up almost half by value of dollars 175m (pounds 92m) of UK exports on a draft hit list prepared by Carla Hills, the US trade representitive.

Allied Lyons, 30 per cent of whose Beefeater sales go to the US, and Guinness with its Tanqueray brand, are particularly concerned - together the two labels account for the lion's share of UK-US gin exports.

'It's an important market for us, though it's not our biggest business in the US which is Scotch, which is not targeted,' a Guinness spokesman said. But one of the industry's fears is that the dispute could spiral into a trade war that would suck in other products. Moreover, sales of liqueurs such as Drambuie, and sweets, biscuits, cheese and cordials may also be affected.

The US is narrowing the list, and manufacturers are in the dark about which products might finally be chosen.

Lobbying has been intense in recent weeks as the US trade department whittled down the list - the aim is to deter dollars 1bn worth of US-EC trade, while the value of the products on the draft list was around dollars 2bn.

The department has now completed legal formalities, however, and is in a position to levy punitive tariffs - which could double the cost of the products involved - at any time. UK manufacturers hope that it will not do so before 18 August at the earliest, when a negotiating period suggested by the EC will expire.

The core of the dispute has nothing directly to do with the products on the hit list - which have been arbitrarily chosen for retaliation.

It relates to EC subsidies for oilseeds, which the Americans claim cost them more than dollars 1bn of trade with Europe a year. The US succeeded in getting a ruling in its favour from the panel of the General Agreement on Tariffs and Trade, which has the job of adjudicating such disputes.

When the EC refused to change its regime - it contests the decision and also says it wants to negotiate compensation with the Americans and all other affected countries - Ms Hills threatened prohibitive tariffs in retaliation.

Each year Britain exports around dollars 88m worth of gin and vodka, dollars 32m worth of confectionery and biscuits, dollars 28m of cordials and dollars 15m of cheese, primarily Stilton and mature cheddar, to America.

A spokesman for the Biscuit Cake Chocolate and Confectionary Alliance said it had suggested that instead of penalising EC-US exports, the EC should lower tariffs on American products which cannot be sourced elsewhere to compensate.